[ by Howard Haykin ] It's a done deal.  The SEC approved FINRA’s proposed new rules governing communications.  FINRA Rules 2210 and 2212 through 2216 (collectively, the Communications Rules) will take the place of the "old guard" - NASD Rules 2210 and 2211 and NASD Interpretive Materials 2210-1 and 2210-3 through 2210-8.  Certain provisions of Incorporated NYSE Rule 472 and certain Supplementary Material and Rule Interpretations related to NYSE Rule 472 will be deleted. Best of all, broker-dealers have 7 months to prepare for their new obligations, since the rules become effective on 2/4/13. Current Rules Governing Communications With the Public. NASD Rules 2210 and 2211, and the Interp.Materials that follow Rule 2210, generally govern all FINRA member firms’ communications with the public. Incorporated NYSE Rule 472 governs communications with the public of firms that also are members of the NYSE.  NASD Rule 2210 divides communications into 6 separate categories, as follows:

• 1.  Advertisement: generally includes written (including electronic) retail communications that do not have a limited audience - e.g., newspaper, magazine, television and radio ads, billboards, websites.
• 2.  Sales literature: generally includes written (including electronic) retail communications that have a more targeted audience - e.g., brochures, performance reports, telemarketing scripts, seminar scripts, form letters.
• 3.  Correspondence: includes written letters, electronic mail, IMs, market letters sent to:   (i) one or more existing retail customers; and (ii) fewer than 25 prospective retail customers within a 30 calendar-day period.
• 4.  Institutional sales material. includes communications that are distributed or made available only to institutional investors - as defined in NASD Rule 2211, generally includes RICs, insurance companies, banks, registered B/D's, RIA's. certain retirement plans, governmental entities, and individual investors and other entities with at least $50 million in assets.
• 5.  Independently prepared reprints: includes reprints of articles from independent publications, as well as reports published by indie research firms.
• 6.  Public appearances: includes unscripted  participation in live event - e.g., interviews, seminars, call-in TV and radio  shows.

These definitions are important because certain of the principal pre-use approval, filing and content standards may apply differently to each category - e.g., members generally must have a principal approve all ads, sales literature and independently prepared reprints prior to use. This pre-use approval requirement does not apply to: (i) institutional sales material; (ii) public appearances; or (iii) correspondence, unless it is sent to 25 or more existing retail customers within a 30 calendar-day period and includes an investment recommendation or promotes a product or service of the firm. While such communications do not require principal pre-use approval, firms still must establish and maintain pols and procedures to supervise them for compliance with applicable standards. FINRA talks about those types of communications that firms have had to file with FINRA Advertising Regulation for review - e.g., ads and sales lit. re: mutual funds, variable insurance products,  public DPP's, and ads re: government securities.  Then there are FINRA rules for submitting a firm's initial advertisement during the first year.  [consult RegNote 12-20 for details] Incorporated NYSE Rule 472 requires an “allied member, supervisory analyst or qualified person” to approve prior to use each ad, sales literature or other similar type of communication. The communications rules include both general and specific content standards. Certain general standards apply to all communications - e.g., requirements that communications be fair and balanced, provide a sound basis for evaluating the facts in regard to any particular security, industry or service, and prohibitions on omitting material facts whose absence would make the communication misleading.  More particular content standards apply to specific issues or securities. Going Forward: New Communication Categories. The rule change reduces the number of current communication categories from 6 to 3, as follows:

• Institutional communication includes written (including electronic) communications that are distributed or made available only to institutional investors, but does not include a firm’s internal communications.  "Institutional investor" generally has the same definition as under NASD Rule 2211(a)(3).

• Retail communication includes any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period.  "Retail investor" includes any person other than an institutional investor, regardless of whether the person has an account with the firm.

• Correspondence includes any written (including electronic) communication that is distributed or made available to 25 or fewer retail investors within any 30 calendar-day period.

What currently qualifies as an advertisement or sales literature generally will now fall under the definition of "retail communication."  Also, to the extent that a firm distributes or makes available a communication that currently qualifies as an independently prepared reprint to more than 25 retail investors within a 30 calendar-day period, the communication also falls under the definition of "retail communication." Note to Readers. The very detailed 26-page Regulatory Notice next goes into (i) Correspondence  ...  (ii) Institutional Communications  ...  (iii) "Reason to Believe" Standard  ...  (iv) Approval, Review and Recordkeeping Requirements  ...  (v) Content Standards  ...  (vi) Predictions and Projections of Performance  ...  ETC. For the time being we'll leave the details for you to read.  C-I will report issues as they're uncovered.  See Link Below to RegNote 12-29. FINRA Staff Contacts. Direct questions to:  Thomas Pappas, VP & Director, Advertising Regulation - (240) 386-4553; or Joseph Savage, VP & Counsel, Investment Companies Regulation - (240) 386-4534. For further details, go to:   [FINRA RegNote12-29, June 2012].